Sat, Feb 11, 2023 page10

• UK avoids recession by narrowest margin

  • Bloomberg
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  The UK last year avoided a recession by the narrowest of margins after a cost-of-living crisis and strikes affected the economy in December.

  GDP was unchanged in the fourth quarter following a revised 0.2 percent decline in the previous three months, the British Office for National Statistics said yesterday.

  Output in December alone fell 0.5 percent.

  

  British Chancellor of the Exchequer Jeremy Hunt delivers a speech at an event in London on Jan. 27.

  Photo: Bloomberg

  The figures meant that in the second half of last year, Britain dodged back-to-back quarterly contractions — the definition of a technical recession. The economy nonetheless was 0.8 percent smaller than at the end of 2019, making the UK the only G7 member that has yet to fully recover output lost during the COVID-19 pandemic.

  “The UK economy ended 2022 on a slightly more positive note, narrowly avoiding a technical recession, but it is still expected to fall into a mild yet prolonged recession throughout this year,” KPMG UK chief economist Yael Selfin said.

  The December figures are “pointing to the continued fragility of the UK economy,” Selfin added.

  British Chancellor of the Exchequer Jeremy Hunt welcomed the figures, but said the British government needs to bear down on inflation, which reached a 41-year high last year.

  “Our economy is more resilient than many feared,” Hunt said in a statement, “However, we are not out the woods yet, particularly when it comes to inflation.”

  For the whole of last year, the British economy grew 4 percent — slower than 7.6 percent growth recorded in 2021, when the UK was recovering from pandemic lockdowns.

  Output in manufacturing and construction stalled in December. Overall industrial production rose 0.3 percent, which was entirely due to cold weather boosting utility output.

  The dominant services industry shrank 0.8 percent, more than twice the pace expected, while consumer-facing services dropped 1.2 percent.

  That reflected poor retail sales and an escalation of strikes, with hundreds of thousands of workers from nurses to train drivers walking off the job seeking better pay.

  The statistics agency said it could not estimate the exact impact of strikes, but that they curtailed output across a wide range of industries.

  More than 1.6 million working days had been lost to labor disputes in the six months through November, putting last year on course to be the worst year for industrial action since the late 1980s. Capital Economics estimated that as many as 1.5 million more were lost in December.

  Strikes by rail and postal workers hit the transport and postal industries. Heath and social work activity shrank 2.8 percent in December, partly because of the impact of National Health Service strikes.

  The statistics agency said various sectors were affected by rail and postal strikes, from hospitality to flower sellers.

  The recession is now thought to have started in the first quarter, with the Bank of England predicting a shallow downturn extending into early next year.

  However, the outlook is less bleak than a few months ago, thanks to tumbling natural gas and electricity prices.

  The central bank expects consumer spending to hold up better through the recession, as firms choose to retain staff given the hiring difficulties many of them have faced.
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